dtc agreement between lebanon and malaysia

8/2/2019 DTC agreement between Lebanon and Malaysia

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P.U. (A) 418/ 2003Signed: 20 January 2003Effective Date: 1 January 2005 (see Article 27).

AGREEMENT BETWEEN THE GOVERNMENT OF MALAYSIA AND THE

GOVERNMENT OF THE LEBANESE REPUBLIC FOR THE AVOIDANCE OF

DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH

RESPECT TO TAXES ON INCOME

The Government of Malaysia and the Government of the Lebanese Republicdesiring to conclude an Agreement for the avoidance of double taxation and theprevention of fiscal evasion with respect to taxes on income, have agreed asfollows:

Article 1PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of theContracting States.

Article 2TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of aContracting State, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on totalincome or on elements of income.

3. The existing taxes which are the subject of this Agreement are:

(a) in Malaysia:

(i) the income tax; and

(ii) the petroleum income tax

(hereinafter referred to as "Malaysian tax");

(b) in Lebanon:

(i) the tax on the profits of industrial, commercial and non-commercialprofessions;

(ii) the tax on salaries, wages and pensions;


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(iii) the tax on income derived from immovable capital;

(iv) the tax on built property

(hereinafter referred to as "Lebanese tax").

4. This Agreement shall apply also to any identical or substantially similar taxeswhich are imposed after the date of signature of this Agreement in addition to, orin place of, the existing taxes referred to in paragraph 3. The competentauthorities of the Contracting States shall notify each other of any significantchanges that have been made in their taxation laws within a reasonable period oftime after such changes.

Article 3GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the terms "a Contracting State" and "the other Contracting State" meanLebanon or Malaysia, as the context requires;

(b) the term "Malaysia" means the territories of the Federation of Malaysia,the territorial waters of Malaysia and the sea-bed and subsoil of theterritorial waters, and includes any area extending beyond the limits ofthe territorial waters of Malaysia, and the sea-bed and subsoil of anysuch area, which has been or may hereafter be designated under thelaws of Malaysia and in accordance with international law as an areaover which Malaysia has sovereign rights for the purposes of exploringand exploiting the natural resources, whether living or non-living;

(c) the term "Lebanon" means the territory of the Lebanese Republicincluding its territorial sea, as well as the exclusive economic zone overwhich Lebanon exercises sovereign rights in accordance with the law ofLebanon and international law for the purpose of exploring andexploiting, conserving and managing the natural resources, whetherliving or non-living, of the waters superjacent to the sea-bed and itssubsoil;

(d) the term "person" includes an individual, a company and any other bodyof persons;

(e) the term "company" means any body corporate or any entity which istreated as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and "enterprise of the otherContracting State" mean respectively an enterprise carried on by a


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resident of a Contracting State and an enterprise carried on by a residentof the other Contracting State;

(g) the term "national" means:

(i) any individual possessing the nationality or citizenship of aContracting State;

(ii) any legal person, partnership or association deriving its status assuch from the laws in force in a Contracting State;

(h) the term "international traffic" means any transport by a ship or an aircraftoperated by an enterprise of Contracting State, except when the ship oraircraft is operated solely between places in the other Contracting State;

(i) the term "competent authority" means:

(i) in the case of Malaysia, the Minister of Finance or his authorisedrepresentative;

(ii) in the case of Lebanon, the Minister of Finance or his authorizedrepresentative.

2. As regards the application of this Agreement by a Contracting State, anyterm not defined therein shall, unless the context otherwise requires, have themeaning that it has under the law of that State for the purposes of the taxes towhich this Agreement applies, any meaning under the applicable tax laws of thatState prevailing over a meaning given to the term under other laws of that State.

Article 4RESIDENT

1. For the purposes of this Agreement, the term "resident of a ContractingState" means any person who, under the laws of that State, is liable to tax thereinby reason of his domicile, residence, place of management or any other criterionof a similar nature, and also includes that State, any political subdivision, localauthority or a statutory body thereof. But this term does not include any personwho is liable to tax in that State in respect only of income from sources in thatState.

2. Where by reason of the provisions of paragraph 1 an individual is a residentof both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident only of the State in which he has apermanent home available to him; if he has a permanent home availableto him in both States, he shall be deemed to be a resident only of the


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State with which his personal and economic relations are closer (centreof vital interests);

(b) if the State in which he has his centre of vital interests cannot bedetermined, or if he has not a permanent home available to him in either

State, he shall be deemed to be a resident only of the State in which hehas an habitual abode;

(c) if he has an habitual abode in both States or in neither of them, he shallbe deemed to be a resident only of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competentauthorities of the Contracting States shall settle the question by mutualagreement.

3. Where by reason of the provisions of paragraph 1 a person other than an

individual is a resident of both Contracting States, then the competent authoritiesof the Contracting States shall settle the question by mutual agreement.

Article 5PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term "permanent establishment"means a fixed place of business through which the business of an enterprise iswholly or partly carried on.

2. The term "permanent establishment" includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop; and

(f) a mine, an oil or gas well, a quarry or any other place of extraction ofnatural resources.

3. A building site, a construction, installation or assembly project constitutes apermanent establishment only if it lasts more than nine months within any twelve-month period.


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4. An enterprise of a Contracting State shall be deemed to have a permanentestablishment in the other Contracting State if it carries on supervisory activitiesin that other State for more than six months within any twelve-month period inconnection with a building site or a construction, installation or assembly projectwhich is being undertaken in that other State.

5. The furnishing of services, including consultancy services, by an enterpriseof a Contracting State through employees or other personnel engaged for suchpurposes in the other Contracting State, provided that such activities continue forthe same project or a connected project for a period or periods aggregating morethan three months within any twelve-month period.

6. Notwithstanding the preceding provisions of this Article, the term "permanentestablishment" shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery

of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to theenterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to theenterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose ofpurchasing goods or merchandise, or of collecting information, for theenterprise;

(e) the maintenance of a fixed place of business solely for the purpose ofcarrying on, for the enterprise, any other activity of a preparatory orauxiliary character;

(f) the maintenance of a fixed place of business solely for any combinationof activities mentioned in sub-paragraphs (a) to (e), provided that theoverall activity of the fixed place of business resulting from thiscombination is of a preparatory or auxiliary character.

7. Notwithstanding the provisions of paragraphs 1 and 2, where a person --other than an agent of an independent status to whom paragraph 8 applies -- isacting in one of the States on behalf of an enterprise of the other State, thatenterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for theenterprise, if the person:

(a) has, and habitually exercises in the first-mentioned State an authority toconclude contracts in the name of the enterprise, unless the activities of


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such person are limited to those mentioned in paragraph 6 which, ifexercised through a fixed place of business, would not make this fixedplace of business a permanent establishment under the provisions ofthat paragraph; or

(b) has no such authority, but habitually maintains in the first-mentionedState a stock of goods or merchandise belonging to the enterprise fromwhich he regularly fills orders on behalf of the enterprise.

8. An enterprise shall not be deemed to have a permanent establishment in aContracting State merely because it carries on business in that State through abroker, general commission agent or any other agent of an independent status,provided that such persons are acting in the ordinary course of their business.

9. The fact that a company which is a resident of a Contracting State controls oris controlled by a company which is a resident of the other Contracting State, or

which carries on business in that other State (whether through a permanentestablishment or otherwise), shall not of itself constitute either company apermanent establishment of the other.

Article 6INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property(including income from agriculture or forestry) situated in the other ContractingState may be taxed in that other State.

2. The term "immovable property" shall have the meaning which it has underthe law of the Contracting State in which the property in question is situated. Theterm shall in any case include property accessory to immovable property,livestock and equipment used in agriculture and forestry, rights to which theprovisions of general law respecting landed property apply, usufruct ofimmovable property and rights to variable or fixed payments as consideration forthe working of, or the right to work, mineral deposits, sources and other naturalresources; ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the directuse, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall apply also to the income fromimmovable property of an enterprise and to income from immovable propertyused for the performance of independent personal services.

Article 7BUSINESS PROFITS


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1. The profits of an enterprise of a Contracting State shall be taxable only inthat State unless the enterprise carries on business in the other ContractingState through a permanent establishment situated therein. If the enterprisecarries on business as aforesaid, the profits of the enterprise may be taxed in theother State but only so much thereof as is attributable to that permanent

establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of aContracting State carries on business in the other Contracting State through apermanent establishment situated therein, there shall in each Contracting Statebe attributed to that permanent establishment the profits which it might beexpected to make if it were a distinct and separate enterprise engaged in thesame or similar activities under the same or similar conditions and dealing whollyindependently with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be

allowed as deductions expenses which are incurred for the purposes of thepermanent establishment, including executive and general administrativeexpenses so incurred, whether in the State in which the permanentestablishment is situated or elsewhere. Such deductions shall be determined inaccordance with the taxation law of that State.

4. Insofar as it has been customary in a Contracting State to determine theprofits to be attributed to a permanent establishment on the basis of anapportionment of the total profits of the enterprise to its various parts, nothing inparagraph 2 shall preclude that Contracting State from determining the profits tobe taxed by such an apportionment as may be customary; the method ofapportionment adopted shall, however, be such that the result shall be inaccordance with the principles contained in this Article.

5. If the information available to the competent authority is inadequate todetermine the profits to be attributed to the permanent establishment of anenterprise, nothing in this Article shall affect the application of any law of thatState relating to the determination of the tax liability of a person by the exerciseof a discretion or the making of an estimate by the competent authority, providedthat the law shall be applied, so far as the information available to the competentauthority permits, in accordance with the principles of this Article.

6. No profits shall be attributed to a permanent establishment by reason of themere purchase by that permanent establishment of goods or merchandise for theenterprise.

7. For the purposes of the preceding paragraphs, the profits to be attributed tothe permanent establishment shall be determined by the same method year byyear unless there is good and sufficient reason to the contrary.


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8. Where profits include items of income which are dealt with separately inother Articles of this Agreement, then the provisions of those Articles shall not beaffected by the provisions of this Article.

Article 8SHIPPING AND AIR TRANSPORT

1. Profits of an enterprise of a Contracting State from the operation of ships oraircraft in international traffic shall be taxable only in that State.

2. Paragraph 1 shall also apply to the share of the profits from the operation ofships or aircraft derived by an enterprise of a Contracting State throughparticipation in a pool, a joint business or an international operating agency.

Article 9ASSOCIATED ENTERPRISES

1. Where:

(a) an enterprise of a Contracting State participates directly or indirectly inthe management, control or capital of an enterprise of the otherContracting State, or

(b) the same persons participate directly or indirectly in the management,control or capital of an enterprise of a Contracting State and anenterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprisesin their commercial or financial relations which differ from those which would bemade between independent enterprises, then any profits which would, but forthose conditions, have accrued to one of the enterprises, but, by reason of thoseconditions, have not so accrued, may be included in the profits of that enterpriseand taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of thatState -- and taxes accordingly -- profits on which an enterprise of the otherContracting State has been charged to tax in that other State and the profits soincluded are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had beenthose which would have been made between independent enterprises, then thatother State shall make an appropriate adjustment to the amount of the taxcharged therein on those profits, where that other State considers the adjustment

justified. In determining such adjustment, due regard shall be had to the otherprovisions of this Agreement and the competent authorities of the ContractingStates shall if necessary consult each other.


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Article 10DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to aresident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of whichthe company paying the dividends is a resident and according to the laws of thatState, but if the beneficial owner of the dividends is a resident of the otherContracting State, the tax so charged shall not exceed 5 per cent of the grossamount of the dividends.

The competent authorities of the Contracting States shall exchange informationon the mode of application of this limitation.

This paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares orother rights, not being debt-claims, participating in profits, as well as income fromother corporate rights which is subjected to the same taxation treatment asincome from shares by the laws of the State of which the company making thedistribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial ownerof the dividends, being a resident of a Contracting State, carries on business inthe other Contracting State, of which the company paying the dividends is aresident, through a permanent establishment situated therein, or performs in thatother State independent personal services from a fixed base situated therein,and the holding in respect of which the dividends are paid is effectivelyconnected with such permanent establishment or fixed base. In such case theprovisions of Article 7 or Article 14, as the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives profitsor income from the other Contracting State, that other State may not impose anytax on the dividends paid by the company, except insofar as such dividends arepaid to a resident of that other State or insofar as the holding in respect of whichthe dividends are paid is effectively connected with a permanent establishment ora fixed base situated in that other State, nor subject the company's undistributedprofits to a tax on the company's undistributed profits, even if the dividends paidor the undistributed profits consist wholly or partly of profits or income arising insuch other State.

Article 11INTEREST


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1. Interest arising in a Contracting State and paid to a resident of the otherContracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which itarises, and according to the laws of that State, but if the beneficial owner of the

interest is a resident of the other Contracting State, the tax so charged shall notexceed 10 per cent of the gross amount of the interest. The competentauthorities of the Contracting States shall exchange information on the mode ofapplication of this limitation.

3. Notwithstanding the provisions of paragraph 2, the Government of aContracting State shall be exempt from tax in the other Contracting State inrespect of interest derived from that other State.

4. For the purposes of paragraph 3, the term "Government":

(a) in the case of Malaysia means the Government of Malaysia and shallinclude:

(i) the governments of the states;

(ii) the Bank Negara Malaysia;

(iii) the local authorities;

(iv) the statutory bodies; and

(v) the Export-Import Bank of Malaysia Berhad (EXIM Bank);

(b) in the case of Lebanon means the Government of Lebanon and shallinclude:

(i) the Central Bank of Lebanon (BdL);

(ii) the local authorities;

(iii) the statutory bodies.

5. The term "interest" as used in this Article means income from debt-claims ofevery kind, whether or not secured by mortgage and whether or not carrying aright to participate in the debtor's profits, and in particular, income fromgovernment securities and income from bonds or debentures, includingpremiums attaching to such securities, bonds or debentures. Penalty charges forlate payment shall not be regarded as interest for the purpose of this Article.


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6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial ownerof the interest, being a resident of a Contracting State, carries on business in theother Contracting State in which the interest arises, through a permanentestablishment situated therein, or performs in that other State independentpersonal services from a fixed base situated therein, and the debt-claim in

respect of which the interest is paid is effectively connected with such permanentestablishment or a fixed base. In such case the provisions of Article 7 or Article14, as the case may be, shall apply.

7. Interest shall be deemed to arise in a Contracting State when the payer isthat State itself, a political subdivision, a local authority or a statutory bodythereof, or a resident of that State. Where, however, the person paying theinterest, whether he is a resident of a Contracting State or not, has in aContracting State a permanent establishment or a fixed base in connection withwhich the indebtedness on which the interest is paid was incurred, and suchinterest is borne by such permanent establishment or fixed base, then such

interest shall be deemed to arise in the State in which the permanentestablishment or fixed base is situated.

8. Where, by reason of a special relationship between the payer and thebeneficial owner or between both of them and some other person, the amount ofthe interest, having regard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer and the beneficialowner in the absence of such relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, the excess part of thepayments shall remain taxable according to the laws of each Contracting State,due regard being had to the other provisions of this Agreement.

Article 12ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the otherContracting may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in whichthey arise, and according to the laws of that State, but if the beneficial owner ofthe royalties is a resident of the other Contracting State, the tax so charged shallnot exceed 8 per cent of the gross amount of the royalties.

3. The term "royalties" as used in this Article means payments of any kindreceived as a consideration for the use of, or the right to use, any copyright ofliterary, artistic or scientific work including cinematograph films, and films ortapes for radio or television broadcasting, transmission to the public by satellite,cable, optic fiber or similar technology, any patent, trade mark, design or model,plan, secret formula or process, or for information concerning industrial,commercial or scientific experience.


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4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial ownerof the royalties, being a resident of a Contracting State, carries on business inthe other Contracting State in which the royalties arise, through a permanentestablishment situated therein, or performs in that other State independent

personal services from a fixed base situated therein, and the right or property inrespect of which the royalties are paid is effectively connected with suchpermanent establishment or fixed base. In such case the provisions of Article 7or Article 14, as the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer isthat State itself, a political subdivision, a local authority or a statutory bodythereof, or a resident of that State. Where, however, the person paying suchroyalties, whether he is a resident of a Contracting State or not, has in aContracting State a permanent establishment or a fixed base in connection withwhich the obligation to pay the royalties was incurred, and such royalties are

borne by such permanent establishment or fixed base, then such royalties shallbe deemed to arise in the State in which the permanent establishment or fixedbase is situated.

6. Where, by reason of a special relationship between the payer and thebeneficial owner or between both of them and some other person, the amount ofthe royalties, having regard to the use, right or information for which they arepaid, exceeds the amount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship, the provisions of thisArticle shall apply only to the last-mentioned amount. In such case, the excesspart of the payments shall remain taxable according to the laws of eachContracting State, due regard being had to the other provisions of thisAgreement.

Article 13CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation ofimmovable property referred to in Article 6 situated in the other Contracting Statemay be taxed in the Contracting State in which such property is situated.

2. Gains from the alienation of movable property forming part of the businessproperty of a permanent establishment which an enterprise of a ContractingState has in the other Contracting State including such gains from the alienationof such a permanent establishment (alone or with the whole enterprise), may betaxed in that other State.

3. Gains derived by a resident of a Contracting State from the alienation ofships or aircraft operated in international traffic by an enterprise of that


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Contracting State or movable property pertaining to the operation of such shipsor aircraft, shall be taxable only in that Contracting State.

4. Gains from the alienation of any property other than that referred to inparagraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the

alienator is a resident.

Article 14INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a Contracting State in respect of professionalservices or other activities of an independent character shall be taxable only inthat State unless he has a fixed base regularly available to him in the otherContracting State for the purpose of performing his activities. If he has such afixed base, the income may be taxed in the other State but only so much of it asis attributable to that fixed base.

2. The term "professional services" includes especially independent scientific,literary, artistic, educational or teaching activities as well as the independentactivities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and othersimilar remuneration derived by a resident of a Contracting State in respect of anemployment shall be taxable only in that State unless the employment isexercised in the other Contracting State. If the employment is so exercised, suchremuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by aresident of a Contracting State in respect of an employment exercised in theother Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods notexceeding in the aggregate 183 days in any twelve-month periodcommencing or ending in the fiscal year concerned, and

(b) the remuneration is paid by, or on behalf of, an employer who is not aresident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixedbase which the employer has in the other State.


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3. Notwithstanding the preceding provisions of this Article, remuneration inrespect of an employment exercised aboard a ship or an aircraft operated ininternational traffic by an enterprise of a Contracting State may be taxed in thatState.

Article 16DIRECTORS' FEES

Directors' fees and other similar payments derived by a resident of a ContractingState in his capacity as a member of the board of directors of a company which isa resident of the other Contracting State, may be taxed in that other State.

Article 17ARTISTES AND SPORTSMEN

1. Notwithstanding the provisions of Articles 14 and 15 income derived by a

resident of a Contracting State as an entertainer, such as a theatre, motionpicture, radio or television artiste, or a musician, or as a sportsman, from hispersonal activities as such exercised in the other Contracting State, may betaxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer ora sportsman in his capacity as such accrues not to the entertainer or sportsmanhimself but to another person, that income may, notwithstanding the provisions ofArticles 7, 14 and 15, be taxed in the Contracting State in which the activities ofthe entertainer or sportsman are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived fromactivities exercised in a Contracting State if the visit to that State is wholly ormainly supported by public funds of the other Contracting State, a politicalsubdivision, a local authority or a statutory body thereof carried out other than forthe purpose of profit. In such a case, the income is taxable only in theContracting State in which the artiste or the sportsman is a resident.

Article 18PENSIONS AND ANNUITIES

1. Subject to the provisions of paragraph 2 of Article 19, pensions and othersimilar remuneration and annuities paid to a resident of a Contracting State inconsideration of past employment shall be taxable only in that State.

2. The term "annuity" means a stated sum payable periodically at stated timesduring life or during a specified or ascertainable period of time under anobligation to make the payments in return for adequate and full consideration inmoney or money's worth.


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3. Notwithstanding the provisions of paragraph 1 of this Article pensions andother similar payments made under the social security legislation of a ContractingState shall be taxable only in that State.

Article 19GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remuneration, other than a pension,paid by a Contracting State or a political subdivision or a local authorityor a statutory body thereof to an individual in respect of servicesrendered to that State or political subdivision or local authority orstatutory body thereof shall be taxable only in that State.

(b) However, such salaries, wages and other similar remuneration, shall betaxable only in the other Contracting State if the services are rendered inthat State and the individual is a resident of that State who:

(i) is a national of that State, or

(ii) did not become a resident of that State solely for the purpose ofrendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or apolitical subdivision or a local authority or a statutory body thereof to anyindividual in respect of services rendered to that State or politicalsubdivision or local authority or statutory body shall be taxable only inthat State.

(b) However, such pension shall be taxable only in the other ContractingState if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wagesand other similar remuneration and to pensions in respect of services rendered inconnection with any business carried on by a Contracting State or a politicalsubdivision or a local authority or a statutory body thereof.

Article 20STUDENTS AND TRAINEES

An individual who is a resident of a Contracting State immediately before makinga visit to the other Contracting State and is temporarily present in the other Statesolely:

(a) as a student at a recognised university, college, school or other similarrecognised educational institution in that other State;


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(b) as a business or technical apprentice; or

(c) as a recipient of a grant, allowance or award for the primary purpose ofstudy or training from the Government of either State or from a scientific,educational, religious or charitable organisation or under a technical

assistance programme entered into by the Government of either State,

shall be exempt from tax in that other State on:

(i) all remittances from abroad for the purposes of his maintenance,education, study or training;

(ii) the amount of such grant, allowance or award.

Article 21OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, notdealt with in the foregoing Articles of this Agreement may be taxed in that State.

2. The provisions of paragraph 1 shall not apply to income, other than incomefrom immovable property as defined in paragraph 2 of Article 6, if the recipient ofsuch income, being a resident of a Contracting State, carries on business in theother Contracting State through a permanent establishment situated therein, orperforms in that other State independent personal services from a fixed basesituated therein, and the right or property in respect of which the income is paid iseffectively connected with such permanent establishment or fixed base. In suchcase the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of aresident of a Contracting State not dealt with in the foregoing Articles of thisAgreement and arising in the other Contracting State may also be taxed in thatother State.

Article 22ELIMINATION OF DOUBLE TAXATION

1. Subject to the laws of Malaysia regarding the allowance as a credit againstMalaysian tax of tax paid in any country other than Malaysia, the Lebanese taxpaid under the laws of Lebanon and in accordance with this Agreement by aresident of Malaysia in respect of income derived from Lebanon shall be allowedas a credit against Malaysian tax paid in respect of that income. Where suchincome is a dividend paid by a company which is a resident of Lebanon to acompany which is a resident of Malaysia and which owns not less than 10 percent of the voting shares of the company paying the dividend, the credit shalltake into account the Lebanese tax paid by that company in respect of its income


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4. Enterprises of a Contracting State, the capital of which is wholly or partlyowned or controlled, directly or indirectly, by one or more residents of the otherContracting State, shall not be subjected in the first-mentioned State to anytaxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which other similarenterprises of that first-mentioned State are or may be subjected.

5. Except where the provisions of Article 9, paragraph 7 of Article 11, orparagraph 6 of Article 12 apply, interest, royalties and other disbursements paidby an enterprise of a Contracting State to a resident of the other ContractingState shall, for the purpose of determining the taxable profits of such enterprise,be deductible under the same conditions as if they had been paid to a resident ofthe first-mentioned State. Similarly, any debts of an enterprise of a ContractingState to a resident of the other Contracting State shall, for the purpose ofdetermining the taxable capital of such enterprise, be deductible under the same

conditions as if they had been contracted to a resident of the first-mentionedState.

6. In this Article, the term "taxation" means taxes to which this Agreementapplies.

Article 24MUTUAL AGREEMENT PROCEDURE

1. Where a resident of a Contracting State considers that the actions of one orboth of the Contracting States result or will result for him in taxation not inaccordance with the provisions of this Agreement, he may, irrespective of theremedies provided by the domestic laws of those States, present his case to thecompetent authority of the State of which he is a resident or, if his case comesunder paragraph 1 of Article 23, to that of the Contracting State of which he is anational. The case must be presented within three years from the first notificationof the action resulting in taxation not in accordance with the provisions of thisAgreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolvethe case by mutual agreement with the competent authority of the otherContracting State, with a view to the avoidance of taxation which is not inaccordance with this Agreement. Any agreement reached shall be implementednotwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour toresolve by mutual agreement any difficulties or doubts arising as to theinterpretation or application of this Agreement. They may also consult togetherfor the elimination of double taxation in cases not provided for in this Agreement.


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4. The competent authorities of the Contracting States may communicate witheach other for the purpose of reaching an agreement in the precedingparagraphs.

Article 25EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting State shall exchange suchinformation as is necessary for carrying out the provisions of this Agreement or ofthe domestic laws of the Contracting States concerning taxes covered by thisAgreement insofar as the taxation thereunder is not contrary to this Agreement,especially in order to prevent fraud or evasion in respect of such taxes. Anyinformation received by a Contracting State shall be treated as secret in thesame manner as information obtained under the domestic laws of that State andshall be disclosed only to persons or authorities (including courts and

administrative bodies) concerned with the assessment and collection of, theenforcement or prosecution in respect of, or the determination of appeals inrelation to, the taxes covered by this Agreement. Such persons or authoritiesshall use the information only for such purposes. They may disclose theinformation in public court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to imposeon a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and theadministrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in thenormal course of the administration of that or of the other ContractingState;

(c) to supply information which would disclose any trade, business,industrial, commercial or professional secret or trade process, orinformation, the disclosure of which would be contrary to public policy(ordre public).

Article 26MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members ofdiplomatic missions or consular posts under the general rules of international lawor under the provisions of special agreements.

Article 27ENTRY INTO FORCE


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This Agreement shall be ratified and shall enter into force on the 30th day afterthe date of the last notification indicating that both States have complied with thedomestic legal procedures required in each State for its entry into force. TheAgreement shall apply:

(a) in Malaysia:

(i) in respect of Malaysian tax, other than petroleum income tax, to taxchargeable for any year of assessment beginning on or after the firstday of January in the calendar year following the year in which thisAgreement enters into force;

(ii) in respect of petroleum income tax, to tax chargeable for any year ofassessment beginning on or after the first day of January of thesecond calendar year following the year in which this Agreement

enters into force;

(b) in Lebanon:

(i) in respect of taxes withheld at the source to the income derived on orafter the first day of January in the calendar year next following theyear in which the Agreement enters into force; and

(ii) in respect of other taxes on profit and income derived on or after thefirst day of January in the calendar year next following the year inwhich the Agreement enters into force.

Article 28TERMINATION

This Agreement shall remain in effect indefinitely, but either Contracting Statemay terminate this Agreement, through diplomatic channel, by giving to the otherContracting State written notice of termination on or before June 30th in anycalendar year after the period of five years from the date on which thisAgreement enters into force. In such an event this Agreement shall cease tohave effect:

(a) in Malaysia:

(i) in respect of Malaysian tax, other than petroleum income tax, to taxchargeable for any year of assessment beginning on or after the firstday of January in the calendar year following the year in which thenotice is given;


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(ii) in respect of petroleum income tax, to tax chargeable for any year ofassessment beginning on or after the first day of January of thesecond calendar year following the year in which the notice is given;

(b) in Lebanon:

(i) in respect of taxes withheld at the source to the income derived on orafter the first day of January in the calendar year next following theyear in which the notice is given; and

(ii) in respect of other taxes on profit and income derived on or after thefirst day of January in the calendar year next following the year inwhich the notice of termination is given.

In witness whereof the undersigned, duly authorised thereto, by their respectiveGovernments, have signed this Agreement.

Done in duplicate at Beirut this 20th day of January 2003, in the Englishlanguage.

PROTOCOL

At the signing of the Agreement between the Government of Malaysia and theGovernment of the Lebanese Republic for the Avoidance of Double Taxation andthe Prevention of Fiscal Evasion with respect to Taxes on Income, bothGovernments have agreed that the following provision shall form an integral partof the Agreement:

With reference to paragraph 1 of Article 4, it is understood that the secondsentence of this paragraph is not to exclude residents of countries adopting aterritorial principle in their taxation law.

With reference to paragraph 5 of Article 23, it is understood that disallowingdeductions on failure to withhold tax on payment of interest or royalties made tonon-resident shall not be construed as discrimination.

In witness whereof the undersigned, duly authorized thereto, by their respectiveGovernments, have signed this Protocol.

Done in duplicate at Beirut this 20th day of January 2003, in the Englishlanguage.

dtc agreement between lebanon and malaysia

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